The government and LIC representatives want the minutes of bank’s board meeting held on March 28 that supported ICICI Bank CEO & MD Chanda Kochhar

The Life Insurance Corporation of India (LIC), which holds about a 9.4 per cent stake in ICICI Bank, and the government’s new nominee on the private lender’s board have called a meeting of the bank’s top management this week. This comes against the backdrop of the recent developments in the ICICI Bank-Videocon case and declining investor confidence.

The meeting will discuss measures to restore confidence in the bank’s governance standards and allay fears among investors.

The government and LIC representatives also want an explanation, including the minutes of bank’s board meeting held on March 28 that supported ICICI Bank Chief Executive Officer and Managing Director (CEO & MD) Chanda Kochhar even as the Central Bureau of Investigation (CBI) investigation was picking up pace.

LIC Chairman V K Sharma and government nominee Lok Ranjan, both directors on the ICICI Bank board, discussed the crisis at the bank on Monday and agreed to an urgent action plan to restore confidence in the bank, said a source familiar with the development. The source said the possibility of appointing an interim CEO during the course of investigation was also discussed.

On Monday, rating agency Fitch said the presence of the bank’s CEO on the credit committee that sanctioned the Videocon loan, and the bank’s reluctance to support an independent probe had created doubts over the strength of its corporate governance practices.

The board’s March 28 statement was made a few days before the CBI initiated a preliminary enquiry (PE) against Kochhar’s husband, Deepak Kochhar, and a few Videocon Industries executives for alleged quid pro quo. Deepak Kochhar, ICICI Bank and Videocon have denied any wrongdoing.

On March 28, ICICI Bank had said the board had concluded that there was no question of any quid pro quo/nepotism or conflict of interest as alleged in various rumours. “The board has full confidence and reposes full faith in Chanda Kochhar. The board commends the entire management team under the leadership of the MD & CEO for their hard work and dedication,” the board had said.

This swift statement and ICICI Bank chairman M K Sharma’s televised statement a day later took the government by surprise, the source said.

Quoting anonymous sources, Bloomberg reported on Monday that some outside directors opposed Kochhar continuing with the bank. The report added the board was expected to meet early this week to decide its course of action. Kochhar’s tenure as CEO of ICICI Bank ends on March 31, 2019.

ICICI Bank has 12 members on its board, with five executive directors, and is chaired by a non-executive chairman. The independent directors on the bank’s board include Uday Chitale, Dileep Choksi, Neelam Dhawan and Tushaar Shah, apart from LIC and the government nominee.

LIC, the largest institutional shareholder in ICICI Bank, is concerned over losses incurred due to the decline in the bank’s stock price. ICICI Bank has lost about 8.5 per cent of its value since reports about the alleged conflict of interest against Chanda Kochhar became public. On Monday, the ICICI Bank stock closed at Rs 280 apiece.

Since last week, Deepak Kochhar’s brother, Rajiv Kochhar, and Videocon’s consultant, Mahesh Chandra Pungalia, have been quizzed by the CBI as part of the investigations.